Social cohesion and economic competitiveness

Economic competitiveness and social cohesion in the ‘European model’

The existence of a European social model, in which economic structure and social relations are differently combined than in other areas of the Western world, has long been an essential part of the self-representation and external image of a united Europe, which has brought together a number of national representations and self-representations (such as Germany’s ‘social market economy’ and ‘Rhenish capitalism’). Though it retains certain basic shared traits, the European social model has not followed the same path in different countries and groups of countries, as witnessed by the many country studies dealing with the topic in the literature (Regini, 2009).

This literature dates from the second half of the twentieth century, and in particular from the 1970s onwards, and refers to the countries of the Common Market/European Community/European Union. There is also a sociological and historiographic literature that often goes much further back in time to trace the concept’s origins and continuity, particularly in European cities (Pichierri, 1997; Bagnasco and Le Galès, 2001; Le Galès, 2002).

The European model and European ‘discourse’ center on the idea that it is both desirable and possible for social cohesion and economic competiveness to coexist within a territorially delimited social formation – not necessarily a state – and that the two dimensions reinforce each other, producing a ‘high road’ to development. In one of the more stylized, influential and original versions, inspired chiefly by the German experience, Streeck (1997) introduced the idea of ‘beneficial constraints’: the costs imposed on the economy for social purposes oblige firms to choose the high road. This is a recurrent idea among sociologists of German industry: in a celebrated study, Kern and Schumann (1984) also demonstrated that the cost burdens firms were required to bear for training their workers proved to be a powerful factor in upskilling and upgrading industrial work. This is an idea that is also found in more recent developments regarding potential ‘institutional complementarities’. ¹

With different degrees of emphasis, the conviction of the synergetic coexistence of competitiveness and cohesion is embodied in hundreds of documents and official positions of the European Union. These are positions that were formally confirmed by the Lisbon European Council of 2000 ² and extended by the Gothenburg Council in the following year, which added attention to environmentally sustainable development. ³ They are also positions that have inspired European policies (and territorial policies in particular) from the Community’s beginnings. From this standpoint, then, social cohesion (and, later, environmental sustainability) are not an additional cost to be paid for development and economic competitiveness, but a dynamic component and a propulsive factor: this version of development is thus put forward not (only) as a question of values, but also for functional reasons.

Nevertheless, many critics argue that this version of the European social model is – or at least has become – a mere façade masking the steady rise of the neoliberal ‘pensée unique’. In the more radical versions, it is simply maintained that the EU re-proposes and promotes a ‘stateless market’ where welfare is a cost to be cut in order to survive in a globalized world, and Lisbon, for these critics, is a turning point in this direction.

This is a view that is also widespread in the social sciences. Take, for example, the interpretation of the Lisbon strategy (or rather, of its implementation) offered by La rivista delle politiche sociali (2009) in an issue devoted to the topic:

The so-called ‘Renewed strategy’ of 2005 – which was intended as a means of regaining Europe’s competitive capacity compared to other world economies – clearly tipped the balance away from the ‘social dimension’ (which had hitherto been given the same weight as the economic and employment dimensions) and towards economic factors (chiefly productivity and labor flexibility).

Or again, the repeated warnings voiced by Luciano Gallino (2011) about the destructive effect on social cohesion and the institutional structures of the welfare state exerted by the work of a ‘troika’ made up of the European Commission, the European Central Bank and the International Monetary Fund.

Other criticisms concentrate on how the European discourse has entered into concrete areas of action. There is a type of critique, heavily influenced by the thinking of Amartya Sen, which, starting from an analysis of the market and labor policies, accuses certain European policies (and, to an even greater extent, certain national policies) of aiming for employability rather than the growth of capabilities (Eurocap, Capright, see www.capright.eu). There is another which, dealing with industrial restructuring – a test ground for the traditional European discourse if ever there was one – notes that there is an increasing naturalization of this process, where any attention to attenuating the consequences is limited to those that are socially most painful (Cattero, 2010; Negrelli and Pichierri, 2010).

In the theoretical perspective proposed in the next two sections, however, the keenest criticisms are those detecting in the process of European integration ‘a constitutional asymmetry’ between policies promoting market efficiencies and policies promoting social protection and equality (Scharpf, 2002: 1). As Offe (2003: 467) writes, after an analysis of the many reasons why welfare is still a national affair: ‘The supranational EU regime has been amazingly successful in homogenizing across the EU monetary and fiscal conditions, but not so the conditions of employment and social protection.’

That there is, to say the least, a growing and unresolved tension between the inclusive European model and the neoliberal model is doubtless true, and the tension has become more visible with the ‘end of social democracy’ (Berta, 2009: Chapter 2) in Europe, which for a moment made Obama look like the true heir to this model.

The crisis of the classic European social model and the as yet uncertain outlines of its successor have been discussed by Streeck (2000), the social scientist and social democratic advocator who has made major contributions to the theoretical analysis and practical review of the European social model, either directly or mediated by the ‘German model’. In Streeck’s view, globalization puts pressure on Europe and its member states to take the lead in competitiveness: a pressure that makes the institutions of cohesion developed in the Fordist period obsolete, and likely to produce perverse effects. The new solidarity aims for competitiveness rather than redistribution, and thus for an investment in individual (human capital, employability) and collective resource endowments (infrastructures): this is a productivist reconstruction of solidarity whose outcomes are still unpredictable. Streeck writes that current developments are not necessarily those he would prefer, but that saving the European social model today means rethinking it completely.

In a more recent contribution, well inside the present crisis, Streeck (2011) seems to share more radical views. What is at stake is not (only) the European model, but the very possibility of ‘democratic capitalism’. In a sort of intellectual short circuit, ‘cohesion’ becomes a synonym for ‘democracy’, since social need and entitlement are determined on the basis of the collective choices of democratic politics (Streeck, 2011: 7), and this criterion of allocation of resources is superseded by the one based on marginal productivity: the market has won.

The need to rethink the European idea of ‘cohesion’ has recently been addressed by Barca (2009), in a report on the reform of cohesion policies: the concentration on policies and organizational tools has opened up a line of thought of which this article is a part. The central idea is that pursuing objectives of efficiency and equity with the same policies is fundamentally wrong, or at least inefficient. The two sets of objectives, according to Barca, call for different sets of policies. The clear distinction between objectives and policies for the two dimensions could be considered as a premise or a precondition for tackling the problem that Zeitlin (2009: 40–1) has so drastically stated: the ‘absence of any specific institutional mechanisms to ensure a mutually reinforcing feedback between the social, economic and employment dimensions of the relaunched Lisbon Strategy’, for example, through the systematic evaluation of the effects of one set of policies on the objectives for the other set (we will return to the issue of how different spheres interact in the next paragraph).

Speaking of ‘social cohesion’ and ‘economic competitiveness’ entails problems of definition that would require far more discussion than the space available to us here permits. The first of these terms (together with others that are partially or tendentially equivalent, such as ‘solidarity’ in the Durkheimian sense and ‘integration’ in the Parsonian sense) has a long history in sociological thought. The definitions that occur in European documents can appear desperately generic and/or desperately normative, as in the following example:

As understood by the Council of Europe, social cohesion is the capacity of a society to ensure the welfare of all its members, minimising disparities and avoiding polarisation. A cohesive society is a mutually supportive community of free individuals pursuing these common goals by democratic means. (European Committee for Social Cohesion, 2004)

This and other similar definitions, however, become less generic when attempts are made to translate them into indicators that can be verified empirically (Council of Europe, 2005).

Other difficulties arise in defining ‘competitiveness’, especially when the concept is applied not only to firms, but also to the territories that host them, where, as Krugman (1994) explains, we come up against irresolvable contradictions.

The difficulties increase when the terms, and their synonyms, are paired. We have spoken of ‘economic competitiveness’ and of ‘social cohesion’. But the same phenomena are classified and analyzed with a certain number of synonyms: the most important pair is probably that of efficiency/equity. The terms cannot be used indifferently. We can note, for instance, that whereas ‘efficiency’ conveys an impression of neutrality, ‘competitiveness’ has a much more explicit ideological impact (Casiccia, 2011).

I do not intend to deal with these issues here, to which one or more entire papers should be dedicated. I will assume that there are separate spheres of activity, with distinct institutions and logics of action (‘economy and society’, to use another classic dichotomy), and I will limit myself to two final caveats.

‘Inclusion’ is often used as a synonym of ‘cohesion’. It seems to me to be more correct to think of inclusion as a precondition of cohesion: the problem of cohesion arises once entry into the system has already taken place, when the fact of belonging is established. We should distinguish between forms of exclusion which ‘keep out’ and relative forms of exclusion that affect those who are inside. Inclusion, for example, of women once and immigrants today, can become full inclusion – in the sense stated in European cohesion policies – or a new form of total or partial exclusion (regarding the inclusion/exclusion dialectic, see Wagner, 2012: Chapter 3).

It should also be pointed out that, at least since the late 1990s, environmental ‘sustainability’ has been heavily emphasized as a component of the European model (which must be a model of sustainable development) and closely linked with the dimension of cohesion, even, in certain formulations, overlapping it: something that seems to me to be a harbinger of further conceptual and political confusion.

Social cohesion and economic competitiveness as ‘legitimate orders’

One of the images that recurs, though in highly dissimilar forms, in the social sciences is that of society divided into separate spheres of activity, each with its own institutional rules, ways of operating, and characteristic organizations. This is the interpretation given in classics such as Polanyi (1971) (exchange, redistribution, reciprocity) or Parsons (1951) (subsystems of the social system, functional prerequisites). But it is also fundamental for neo-institutionalists such as DiMaggio and Powell (1991; ‘recognized areas of institutional life’) or for sociologists of the economy who think in terms of state, market, community, association, organization as regulating principles (Schmitter and Streeck, 1985; Crouch et al., 2004). A variation is that of scholars who concentrate on divisions of this kind within the same sphere or institutional macro-area, and the economic sphere in particular: for example, the economy of conventions, which distinguishes between different mondes de production, which may be territorially based (Salais and Storper, 1993) or Herrigel (1996), who identifies at least two different orders, likewise with territorial connotations, in the German industrial system. Among recent developments, far more attention than is possible here should be devoted to the ‘pragmatic sociology’ of Boltanski and Thévenot (1991), where the distinction is not so much between areas of activity, but between types of conduct (‘régimes d’action’ ‘orders of worth’) that can be found in the most dissimilar situations.

This notion of separate spheres with irreducible rationalities has varying consequences. Polanyi insists on the incompatibility between the three modes of resource allocation (reciprocity, redistribution, exchange), and on the destructive results that occur when a single one of them – the market – gains sway over the others. A (re)integration of the three principles of regulation, however, would be both desirable and possible: the economy is embedded in society; society defends itself from the destructive impact of the separation/predominance of the market.

A view that is more representative of the sociological mainstream is taken by Parsons, for whom the harmonious coexistence and interaction of separate, specialized spheres of action and logics are what makes the entire social system function efficiently. Separation and differentiation in separate spheres have become synonyms of modernity, assuming a central role in the theories and policies of modernization, ⁴ and in the different variants of institutionalism.

In this as in other fields, Weber has provided us with seminal ideas for sociological analysis. One such concept – still fruitful, as well as being compatible with more recent institutional approaches – is that of ‘legitimate order’. As Weber (1956) writes in a well-known passage:

Action, especially social action which involves a social relationship, may be guided by the belief in the existence of a legitimate order. The probability that action will actually be so governed will be called the ‘validity’ of the order in question.

The content of a social relationship is an order when conduct is oriented by ‘maxims’ that do not refer (only) to self-interest or customary behavior, but also to value: the more legitimate the order, the more stable it will be.

Orders, as complexes of norms inspired by values, are quite close to what contemporary sociology calls ‘institutions’. More precisely, institutions are ‘criteria of rationality in delimited contexts of action, in reference to values and capable of shaping conduct’ (Lepsius, 2006: 32). ⁵ In Lepsius’ interpretation, order seen as an institution (or rather, as the result of institutions), through compliance with its ‘maxims’, produces ‘externalities’ which must, if necessary, be managed by other orders. For example:

The firm on the one hand resists intrusion by the state’s economic policy in its internal management, but off-loads the effects of the tensions it generates onto the exterior. In this connection, Lepsius speaks of the ‘externalization’ of the consequences of institutionalizing a criterion of rationality. The element that makes up society is thus the relationship, always potentially conflictual, which is established between institutions, as well as within them. (Cavalli, 2006: 11–12)

In Lepsius’ interpretation (which here is consistent with the idea of modernity and progress held by much of contemporary sociology), the differentiation between orders is fundamentally positive, and managing the inevitable tensions is one of the building blocks of a modernization policy. The opposite process, ‘de-differentiation’, is associated in Germany with the rise of authoritarian regimes such as the Third Reich and the German Democratic Republic. The ‘economic policy and social policy unit’ – a formulation occurring in the SED Congress documents that is surprisingly reminiscent of those in European ‘strategy’ documents – led to disastrous results:

the formula, characteristic of the GDR, of the ‘economic and social policy unit’ meant the de-institutionalization of economic rationality through the merger of criteria of economic, political and politico-social rationality in a planned economy welfare system, separated from the market. (Lepsius, 2006)

Introducing the concept of externality opens up new perspectives on the relationships between competitiveness and cohesion seen as complexes of institutions, as ‘legitimate orders’. For example, we could say that each order can or must have roles or organizations that manage their own or others’ externalities, or even that there are orders whose main function consists of managing the externalities generated by other orders. In addition, we could say that there are orders that produce negative externalities (pollution, unemployment) as well as positive ones (e.g., the ‘industrial atmosphere’ of an industrial district).

Saying that the central problem in the relationships between orders lies in managing their respective externalities is extremely useful, but restrictive. It is conceivable that there is a hierarchy – albeit one that is provisional and subject to change – between orders, some of which expect to be able to limit the independence of others by regulating their activity in some way. The boundaries between orders (institutional areas) and how these boundaries are protected and managed are one of the things that constitute a society: the relationships between Church and state, but also – and this is the issue that concerns us here – the relationships between economic competitiveness and social cohesion, between the economic system and the welfare state, between efficiency and equity.

In the view that has become prevalent in contemporary institutionalist developments (chiefly those linked with D. C. North, 1990), the normative dimension (rules, ‘maxims’) predominates, and the cognitive-interpretative dimension receives little emphasis. It could be said that the same is true for the Weberian ‘legitimate order’, but we can also maintain that the reference to the ‘representation’ of the existence of this order, and the fact that it ‘makes sense’ of social relationships leads us in the direction of the second dimension. The ‘pragmatic sociology’ of Boltanski and Thévenot, which sees conduct as being governed by different ‘regimes of justification’, suggests that conflicts between orders can be regarded as conflicts of interpretation and the possibility that the ‘purity’ of an order of justification can be contaminated by infiltrations from others. ⁶

Relationships between legitimate orders: the organization as a basis for interpretation, the territory as a place of implementation

Interpreting society in terms of separation and interaction between spheres, between orders, is clearer and more efficient if the organizational dimension is explicitly thematized. An awareness of this fact is not widespread among sociologists (including organizational sociologists). Major exceptions are Boltanski and Thévenot (1991; Thévenot, 2001), who, in the practical application of their theoretical perspective, choose the firm as a vantage point for observing the contrasts between ‘regimes of justification’ and between ‘worlds’ and how they are made up. ⁷

Every form of power, writes Weber, requires an administrative apparatus. The action of this administrative apparatus is ‘directed continuously towards the coercive actuation of orders … The existence of this action is what is designated with the term “organization”’ (Weber, 1956: III.13). The ability of each order to apply its rationality by pursuing its objectives is a function of the type of organization available to it (Lepsius, 2006: 66).

Each sphere (be it an order, social subsystem or institutional area) has characteristic organizations: Parsons taught sociologists to classify organizations according to this criterion. Achieving the objectives that are institutionally important in a certain sphere depends on the functioning of the organizations operating in that sphere: the firm pursues profit according to a certain type of rationality, the welfare organizations assist the poor and unemployed according to another type of logic. In North’s metaphor, the institutions are the rules of the game (the ‘maxims’), organizations are the players.

If we take the idea literally that the effectiveness of an order (of an institutional complex) depends on the effectiveness of specialized organizations, it follows that objectives that differ in nature cannot be pursued jointly; more precisely, it is possible that they can be pursued simultaneously, but not by means of the same organization. But it is not necessary to be a specialist to realize that the coexistence of different organizational models and logics in the same organization is closer to being the rule than the exception.

Taking the legitimate order as an ideal-type, and thinking of society as characterized by differentiation and separateness between orders, is analytically useful even if we do not agree with the idea that differentiation and de-differentiation are inexorable processes, and have positive and negative effects respectively on the orders’ effective functioning. Indeed, Weber, in the same paragraph in which he defines the legitimate order, acknowledges that, in the same social group, ‘it is also possible ... for contradictory systems of order to exist at the same time’. And he adds that ‘It is even possible for the same individual to orient his action to contradictory systems of order. This can take place not only at different times, as it is an everyday occurrence, but even in the case of the same concrete act.’ The Weberian view of the separation between orders is thus much more pragmatic and flexible, much less rigid than would appear in Parson’s evolutionism, and even in an author such as Lepsius who is in certain respects neo-Weberian. It should be noted that in the passage we have quoted, Weber presents the case of action oriented to different orders as ‘neutral’: it is not necessarily a question of a ‘conflict’ of roles.

Identifying different types of institutionalized rationality is also useful in dealing with social systems, such as organizations, in which these rationalities can in fact coexist. It is useful because this coexistence is always problematic, and requires complex mechanisms of regulation. But in apparent contrast with the idea of a physiological separation between institutional spheres, their coexistence and interweaving seem at times to function effectively in the pursuit of objectives that differ in nature.

The coexistence of different rationalities, of different ‘logics of organizational action’ (Zan, 1988), is in fact a normal feature of complex organizations: in a large enterprise, the operating logics for marketing differ from those for research and development, in any hospital, there are always tensions between clinical management and administrative management, and so forth. In ‘normal’ cases, however, the different rationalities are not on the same plane, but there is a hierarchy in which one of them – that which is characteristic of the institutional order to which the organization belongs – prevails, while the others have a service function: the intellectual and cosmopolitan orientation of researchers and designers cannot, must not, interfere with the pursuit of profit, the attention to budgetary needs must be instrumental to the hospital’s ability to treat patients, and so on. This is true not only for the relationship with the organization’s ultimate institutional objective, but also for the hierarchy of objectives below it: there are firms where design counts more than production, firms where marketing counts more than design, etc.

The theoretically problematical cases are those in which there are different rationalities (not necessarily contrasting, but different) in the organization which are on the same plane rather than hierarchical. A classic example (which Lepsius also discussed) is the university. Teaching and research are activities that can certainly – though not necessarily – be combined, but are just as certainly characterized by different objectives and needs. And yet, the unity of Forschung und Lehre theorized by Humboldt has long been a fundamental feature of an organization such as the university, the expression of one of the three revolutions (scientific, industrial, democratic) from which modernity emerged (Wagner, 2012).

Thévenot (2001) rejects the idea of a strict correspondence between types of organization and types of order, and argues that each organization must cope with critical tensions between different orders. ⁸ And he goes so far as to say that the only reason for the firm to exist is the need for compromise between market coordination and other types of coordination. ⁹ In its extreme form, this position is hardly tenable – in the last paragraph of the same article, in fact, typologies and ideal types of organization founded on a prevailing order make their return – but it is stimulating precisely because it is so radical. In addition, Thévenot concludes by offering one of the very few convincing explanations that I know of about why an organization (a firm) functions better when it reaches a compromise between different orders, between different modes of coordination: compromise makes the firm more adaptable and effective because it can thus cope simultaneously with critical uncertainties resulting from multiple orders. ¹⁰

If alongside the organizational dimension we also introduce the territorial one, we find cases that are of particular interest to our line of thought, cases where coexistence involves orders that are not only different but even contrasting, and appears to contribute simultaneously to the effective attainment of different institutional aims by a territorial system. Take, for example, the ‘Marshallian industrial district’ theorized by Becattini:

I define the industrial district as a socio-territorial entity which is characterized by the active presence of both a community of people and a population of firms in one naturally and historically bounded area. In the district, unlike in other environments, such as manufacturing towns, community and firms tend, as it were, to merge. (2000: 58–9, emphasis added)

In the ideal-typical version, which in any case is quite close to reality for a certain period and in certain areas, the industrial district has proved itself to be a formula that can optimize both economic success and social cohesion, combining market and community, competition and cooperation. It is no accident that this experience has had a major influence, directly and indirectly, on the European discourse. And it has been an important source of ideas, explicitly or implicitly, for initiatives such as Italy’s ‘negotiated planning’, which have sought to reproduce its principles ‘artificially’, or in other words, in areas that were not always ‘naturally and historically bounded’.

The territorial scale would appear to be decisive here: the combination occurs in a relatively restricted area where the actors are physically close to each other, as well as close in terms of their institutions and thinking. The question of the appropriate territorial scale has been re-proposed to the European Union in the Barca Report on social cohesion, which maintains that distinct objectives for ‘efficiency’ and ‘social inclusion’ can be effectively pursued through a place-based policy.

While the case we have just mentioned is one in which the territorial system is where the combination, the actual merger between the institutional logics of cohesion and of competitiveness can be seen, there are other cases where territorial systems bring their separation to light: zoning serves to reinforce separation, or even to create it. History, geography, urban planning provide an abundance of examples. Today, we have the territorial specialization policies adopted by the Chinese government, with the creation of a variety of ‘Special Economic Zones’ and ‘Special Administration Regions’, where the bounds of what is legal change, and the national territory is not treated as a uniform political space (Ong, 2006: 77). Or take the mechanisms whereby negative externalities are shifted from one order into another. In studying urban marginality, Vitale (2009: 134) ¹¹ analyzes ‘mechanisms for “off-loading” social problems onto specific marginal areas that are typical of many European metropolises and middle-sized cities’.

Undoubtedly, there are other vantage points for investigating regional transfers of the orders for economic performance and for social cohesion in today’s Europe. The steadily growing gap that economic geography perceives (at least in France) between the regions where production takes place and those where the results of economic performance are enjoyed (Davezies, 2008) can also be interpreted in this light.

Conclusion

The intellectual exercise proposed here starts from the existence of distinct spheres and operating principles of society to which much sociological thinking refers: state, market, community; redistribution, exchange, reciprocity, and so forth. They can be seen in Weberian terms as orders with their own rationalities and their own maxims. The concept of legitimate order is sufficiently flexible to be applied within these spheres, which are thus to be understood more as complexes of orders. There is an economic rationality, but different industries follow different maxims; there is a rationality belonging to legitimate power, but the maxims are not the same at the different levels in which the state is organized; there is a rationality belonging to the community, but the maxims that orient conduct in territorially based communities are different from those that orient conduct in communities of practice. This variety of orders can then be grouped and distributed in spheres whose legitimacy is rooted in a small number of fundamental values. The conduct of the same actor, individual or collective, may also be oriented to different orders.

My references to Weber’s thought cannot lay claim to any great philological rigor: far abler scholars have tilled this field (as regards orders, the scholar to whom I owe most is Schluchter, 2005). But in the ongoing debate concerning the European social model and cohesion policy reform, the concepts I have mentioned have helped me perceive that there is a need, on the one hand, to maintain a clear distinction between the objectives and the logics of action for equity, efficiency and sustainability, and, on the other, to bear in mind that the boundaries between these areas are mobile, and that their interactions, combinations and overlappings must be analyzed and governed.

The aim of the article is not to show how competitiveness and cohesion are in fact combined or should be combined, but to formulate a few considerations that are not perhaps entirely obvious for use in analyzing this combination and its policy implications, especially in face of the present crisis.

The first consideration is that it is useful, or even necessary, to keep the legitimate orders and the different types of rationality analytically distinct. Maintaining a clear-cut distinction between the objectives for efficiency and those for social cohesion is necessary regardless of the means that will be used for their implementation. This separation makes it possible to identify the externalities (often unintended or perverse consequences of policies) and evaluate results.

Though jointly pursuing objectives that differ in nature is not to be ruled out per se, it involves considerable challenges in managing complexity, and calls for a careful choice of organizational tools. If we are dealing with what Lepsius calls de-differentiation, the problems to be managed are intra-organizational, while they are inter-organizational in the case of differentiation, which specializes in different organizations dealing with different tasks. From the organizational standpoint, networking seems to be the best approach for managing situations where different rationalities coexist. The network can combine specialization with the pursuit of multiple objectives: the compromises discussed by Thévenot can also be reached in this way. In organizational studies, useful insights can be provided by the economy of transaction costs, by the theory of resources, by network analyses.

Managing complexity is especially difficult, and especially necessary, when the pursuit of objectives for cohesion – or competitiveness, or sustainability – would appear to require the use of tools belonging to other orders: as when the production of public goods is handed over to private firms or third sector organizations, or when maintaining commons is entrusted to public agencies. In other words, there is no necessary correspondence between actors (whether public, private or associative) and the mechanisms for producing their goods. A public actor, for instance, can produce public goods through organizational means pertaining to the principles of exchange, or reciprocity (Pacetti, 2008); in this case, control over the organizational means is essential if the actor using them is to remain true to the nature of the objectives.

Second, in order to understand and manage the complex interaction among different orders, the territorial scale counts. Coexistence and synergy between different rationalities are probably easier at smaller territorial scales. It is at the local scale that the problem we have posed has received the closest scrutiny, and the most focused policies have been implemented. The problem of the appropriate territorial scale is in any case crucial (cf. Barca, 2009, on the definition of ‘place’). This does not rule out the possibility of coexistence and synergy between different rationalities at the supra-local level. Several of the countries that have best embodied the European model, and that today have departed from it less than the others (Germany, Scandinavia) have demonstrated that they are and can remain competitive in a global economy (Regini, 2009). But which territorial scale is most appropriate for different types of issue, in this as in other contexts, is still very much an open question.

Territorial scale and multilevel governance are then crucial concepts for the analysis of the combination of economic competitiveness and social cohesion. If we take seriously the Weberian idea according to which only organization (administrative apparatus) makes orders effective, we can come, however, to the paradoxical conclusion that, while programs and policies consistent with the European social model can be found in a number of local (sub-national) cases and in some national ones, at the European level such a model is rather a rhetoric, a discourse, an ideology.

At the local level, indeed, we find an entire organizational population made up of agencies using European funds for the implementation of European programs and policies according to political and organizational formulas such as partnership, social dialogue, concertation; such experiences, their outcomes and failures, have been subjected for years to scrutiny and evaluation. At the national level, Rhenish capitalism has developed its own institutions and organizations: the German Mitbestimmung, just to give an example. ‘Constitutional asymmetries’ between cohesion and competitiveness, on the other hand, are clearly visible at the European level. Here we find – notwithstanding well-known contradictions and failures – European economic institutions and organizations such as a Central Bank; but we do not have an European welfare state, let alone institutions and organizations for the joint implementation of social cohesion and economic performance goals. The so-called ‘open method of coordination’ certainly shows an increasing awareness of the problem, but the results of this ‘soft law’ mechanism of enforcement are notoriously modest. I am not saying that the EU had no impact at all on matters such as employment and social protection, but its influence has rather taken the indirect form of Europeanization, producing ‘systemic’ rather than ‘social’ integration (Delanty and Rumford, 2005).

Against this background, and although their arguments are rather different, one can understand why leftist critics have for years attacked a European model that failed to keep its promises, and more recently has not even been willing to make any. From their point of view, what is left of the model is under attack by European institutions and national governments sharing with mainstream economists the idea that ‘economic crises ... essentially stem from market-distorting political interventions for social objectives.’ (Streeck, 2011: 7). Mainstream economists and ‘technical governments’, however, are not (necessarily) the ‘willing executioners’ of international finance: very often, they claim to pursue typical social cohesion objectives, e.g. in the field of employment. In a much quoted interview to the Wall Street Journal (24 February 2012), Mario Draghi, President of the European Central Bank, drastically said: ‘The European social model has already gone …’; immediately adding: ‘… when we see the youth unemployment rates prevailing in some countries. These reforms are necessary to increase employment, especially youth employment, and therefore expenditure and consumption.’

Similar statements often come from members of the European Commission or the Italian ‘technical’ government elected in 2011, whose president is both a ‘mainstream economist’ and a former member of the Commission. They are accompanied, however, by the firm belief that these non-economic goals can and must be pursued through purely economic actions and strategies. If some of my previous observations make sense, this line of thought and action is seriously lacking in awareness of the organizational and territorial difficulties to be faced in any attempt to pursue with the same instruments goals of a potentially conflicting nature. The same economic measures can produce different effects in different regions; bureaucracies are not always the reliable implementation instrument of the Weberian ideal type.

But the belief that social integration can be reached (only) through market rules has more dramatic implications if one looks at it from the angle of the Weberian framework concerning relations among different legitimate orders. An essential component of the ideal typical European model was a certain equilibrium and cooperation between the market order and the order stemming from the sphere of politics and state. Social cohesion (solidarity, integration) is not synonymous with politics, and even less so with democracy; social cohesion depends on political decisions, but political decisions also influence and regulate the working of the economy. One main effect of the present crisis is certainly the rupture of the former equilibrium, and of the former general regulatory claims of the political order: general regulatory claims come now from the market. We can describe this as a reappearance of an endemic conflict between capitalism and democracy, in which democracy is at the moment at risk (Streeck, 2011); as the result of ‘a constitutive tension between economic and political modernity’ (Wagner, 2012); as a shift in the relationships between two sets of legitimate orders, implemented through different organizations at different territorial levels. The new balance is not necessarily for ever; but we must be aware that ‘embeddedness’ (European-style capitalism) ‘is a condition that is more easily lost than gained, due to its dependency upon supportive dispositions of a cognitive as well as moral kind.’ (Offe, 2003: 446)